Consilient: the concurrence of multiple inductions drawn from different data sets.
Induction: the process of deriving general principles from particular facts or instances.
Concurrence: agreement.

Tuesday, February 24, 2009

For every one you could have 33

What we have learned, according to the Ney York Attorney General

149 employees received a combined $858 million and 557 received at least $1 million each for a total of, conservatively, $1.415 billion dollars dived up between 696 individuals.

Now I do believe in that ol’ Reganism “a rising tide raises all boats”, but the reality is that only some boats get the lifts, and, if you look even closer you will notice that it seems to be the same boats at that.

I am all for risk and reward, but what risk did these 696 Merrill Lynch employees take? Maybe it was for a job well done, you know, thanks for your effort – we all benefited from your smarts! But that can’t be it, I mean Merrill Lynch had just posted a $15.31 billion loss in the 4th quarter.

So what is it that makes these 696 so much better than the rest of us that they deserve 1.415 billion dollars? They deserved it not for anything other than the fact that it comes with the position. When the money is flush, that is the normal. As long as we are getting a better return on out money than putting it in the bank, the caretakers can skim off the top whatever they deserve. We let it happen because we are happy with 9 to 12% returns. We are making money because of their effort, so we look the other way and we let them take care of themselves. Win-win!

Why this is ok is that it has been sold to us as a normal course of business. There is nothing wrong with it because there is nothing wrong with capitalism. There is no one mandating that they receive a bonus, no government law, no binding contract, nothing! We let them take it as part of the system we have told ourselves is the best one in the world. Any system that did not give a bonus would not give these returns, and would not be capitalism, which means…….socialism!

Why do they get 1.415 billion? Because of our fear of socialism, because if we do not make it nice for capitalism it will go away leaving in its place its slothy brother, government ownership. Say goodbye to innovation and an elevated standard of living!

Now I run the risk of having my point misconstrued, so I will try to make what I am driving at clear. It is not the bonus system that I am taking issue with, it is the idea that the ratio of effort is 1 to 33, that is - that their benefit to our society is the equivalent of the yearly effort produced by 33 other skilled individuals. Remember, we are only talking the bonus they received, their annual salaries are not counted in which would most likely double the ratio.

My calculation is looking at it from a strictly “in your pocket” format, that is the bonuses were received just like a paycheck would be received. All the other costs for the employee, whether an executive or a machinist, is not factored in. According to the USA Today

“GM says the average UAW laborer makes $29.78 per hour.”

@ 2080 hours in a year that is $61,942.00 per year per laborer.

1 billion is equal to a 1000 million, so $1.415 billion is equal to $1415 million or $1,415,000,000 dollars

With $1,415,000,000 dollars you could employee 22,844 UAW laborers for one year.

If you do the math, the indirect benefit from the buying power unleashed by 22,844 persons will far outpace that of 696 even if all of it would be invested in developing new business, which it will not.